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Intermediate1.5 hours18 terms

Investment Entity Governance Glossary

This curated collection highlights key terms related to the governance and structure of real estate investment entities. It's designed as a quick reference to help you understand commonly encountered terminology when setting up or managing your investment vehicles. Use it to clarify concepts and support your learning journey.

Term Collection

1

Capital Call

A capital call is a formal request by a fund manager for investors to contribute a portion of their previously committed capital to an investment fund or syndication, typically to fund new acquisitions or project expenses.

Intermediate12-15 min
2

General Partner

A General Partner (GP) is the active manager in a real estate limited partnership or syndication, responsible for all operational and strategic decisions, and traditionally bearing unlimited personal liability for the partnership's obligations.

Intermediate12-15 min
3

Fiduciary Duty

Fiduciary duty is a legal and ethical obligation for a professional to act in the best interest of their client, prioritizing the client's needs above their own with utmost loyalty, care, and disclosure.

Intermediate14-17 min
4

Shareholder Agreement

A Shareholder Agreement is a legally binding contract among the shareholders of a corporation, outlining their rights, responsibilities, and obligations, particularly concerning company operations, share transfers, and dispute resolution.

Intermediate5 min
5

Articles of Association

Articles of Association (AoA) are a legal document outlining a company's internal management, governance, and the rights and responsibilities of its shareholders or members. They are crucial for structuring real estate investment entities.

Intermediate8-9 min
6

Limited Partnership

A business entity composed of at least one general partner (GP) who manages the business and assumes unlimited liability, and at least one limited partner (LP) who contributes capital but has limited liability and no management authority.

Intermediate14-18 min
7

Carried Interest

Carried interest is a share of the profits of an investment fund, typically a private equity real estate fund or syndication, paid to the general partners (GPs) or managers after limited partners (LPs) have received their initial capital and a preferred return.

Advanced13 min
8

Distribution Policy

A distribution policy in real estate investing outlines how profits, cash flow, and capital are allocated and disbursed among investors and sponsors in a syndicated deal or fund.

Intermediate5 min
9

Partnership Agreement

A Partnership Agreement is a legally binding contract outlining the terms and conditions between two or more parties who agree to pool resources and share profits or losses in a real estate investment venture. It defines roles, responsibilities, capital contributions, and decision-making processes.

Intermediate8-9 min
10

Limited Liability Company

A Limited Liability Company (LLC) is a business structure that protects its owners' personal assets from business debts and liabilities, while offering flexible taxation options.

Intermediate13-14 min
11

Special Purpose Vehicle

A Special Purpose Vehicle (SPV) is a legally separate entity, often a subsidiary, created by a parent company to isolate financial risk, facilitate specific transactions, or manage assets and liabilities for a particular project, commonly used in real estate for securitization or complex financing.

Intermediate5 min
12

Board of Directors

A Board of Directors (BoD) is a group of individuals elected to oversee the management of a company, representing the interests of its shareholders and ensuring ethical and effective operations.

Beginner3 min
13

Real Estate Syndication

Real estate syndication is a private equity strategy where multiple investors pool capital to acquire and manage large-scale real estate assets, typically led by a sponsor (General Partner) for passive Limited Partners.

Advanced14-15 min
14

Corporate Governance

Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government, and the community.

Intermediate5-6 min
15

Voting Rights

Voting rights in real estate investment grant investors the power to influence decisions regarding the acquisition, management, and disposition of properties or the overall investment vehicle. These rights are typically outlined in partnership agreements, operating agreements, or corporate bylaws.

Intermediate5 min
16

Member Rights

Member rights define the powers, privileges, and responsibilities of individuals or entities within a real estate investment vehicle, typically an LLC or partnership, governing their involvement in decision-making, profit distribution, and operational control.

Intermediate5 min
17

Operating Agreement

A legal document outlining the ownership, management, and operational procedures of a Limited Liability Company (LLC), crucial for defining member rights and protecting personal assets in real estate investments.

Intermediate12-13 min
18

Preferred Return

Preferred Return is a priority distribution threshold in real estate syndications, ensuring limited partners receive a specified annual return on their unreturned capital before general partners share in profits.

Intermediate12-15 min

Common Questions